Question: A business owner is considering relocating. The current facility is not convenient for customers. The business owner could stay at the current location at no
A business owner is considering relocating. The current facility is not convenient for customers. The business owner could stay at the current location at no additional cost, and revenues are expected to be $400,000 if the economy is good and $350,000 if the economy declines. Two locations are available. The first location would give the company better customer contact and increase revenues to $600,000 if the economy is good and $400,000 if the economy declines. The premium location would draw in new customers. The revenues for the premium location are expected to be $800,000 if the economy is good and $550,000 if the economy declines. The cost of the basic location is $50,000. The cost of the premium location is $200,000. The economy has a 60% chance of good growth.
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